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http://hdl.handle.net/10419/33305

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DC Field

Value

Language

dc.contributor.author

Aaberge, Rolf

en_US

dc.contributor.author

Colombino, Ugo

en_US

dc.contributor.author

Wennemo, Tom

en_US

dc.date.accessioned

2006-06-29

en_US

dc.date.accessioned

2010-07-07T09:10:02Z

-

dc.date.available

2010-07-07T09:10:02Z

-

dc.date.issued

2006

en_US

dc.identifier.uri

http://hdl.handle.net/10419/33305

-

dc.description.abstract

During the last two decades, the discrete-choice modelling of labour supply decisions has become increasingly popular, starting with Aaberge et al. (1995) and van Soest (1995). Within the literature adopting this approach there are however two potentially important issues that are worthwhile analyzing in their implications and that so far have not been given the attention they might deserve. A first issue concerns the procedure by which the discrete alternatives are selected to enter the choice set. For example van Soest (1995) chooses (non-probabilistically) a set of fixed points identical for every individual. This is by far the most widely adopted method. By contrast, Aaberge et al. (1995) adopt a sampling procedure suggested by McFadden (1978) and also assume that the choice set may differ across the households. A second issue concerns the availability of the alternatives. Most authors assume all the values of hours-of-work within some range [0, H] are equally available. At the other extreme, some authors assume only two or three alternatives (e.g. non-participation, part-time and full-time) are available for everyone. Aaberge et al. (1995) assume instead that not all the hour opportunities are equally available to everyone; they specify a probability density function of opportunities for each individual and the discrete choice set used in the estimation is built by sampling from that individual-specific density function. In this paper we explore by simulation the implications of the procedure used to build the choice set (fixed alternatives vs. sampled alternatives) and of accounting or not accounting for a different availability of alternatives. The way the choice set is represented seems to have little impact on the fitting of observed values, but a more significant and important impact on the out-of-sample prediction performance.

en_US

dc.language.iso

eng

en_US

dc.publisher

|aInstitute for the Study of Labor (IZA) |cBonn

en_US

dc.relation.ispartofseries

|aIZA Discussion Papers |x1986

en_US

dc.subject.jel

C51

en_US

dc.subject.jel

C52

en_US

dc.subject.jel

H31

en_US

dc.subject.jel

J22

en_US

dc.subject.ddc

330

en_US

dc.subject.keyword

labour supply

en_US

dc.subject.keyword

discrete-choice models

en_US

dc.subject.keyword

quantity constraints

en_US

dc.subject.keyword

prediction performance

en_US

dc.title

Evaluating alternative representations of the choice sets in models of labour supply